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Common VAT Problems
VAT is a complex topic
Many business owners struggle with various questions about VAT. It is a highly complex but important topic.
Once you’ve made an error on a return, your business is far more likely to be inspected in the future. That makes it crucial to file the correct forms on time and with utmost accuracy.
We believe that recognising the areas of VAT that have been most troubling to other businesses is a good way to avoid them yourself. Below are some key issues to be aware of.
01 VAT applied to personal supplies
There are special rules for personal or employee supplies, including things like company business entertainment, cars and fuel. To avoid problems with HMRC, these expenses should be categorised and listed correctly.
02 Missing details
Searching for details at the last minute can lead to late VAT returns and result in fines and more frequent VAT inspections. Make sure you collect all the details you need and record them right away. Good record keeping is essential.
03 Accuracy of dates
You’ll need to know the ‘date of supply’ for each invoice, which isn’t always the date of sale. Changing over to HMRC’s Cash Accounting Scheme could make record keeping much easier.
04 Out of date records
Avoid high accountancy fees by keeping accurate and organised records, making it quicker and easier to submit your VAT returns. Be sure to check the dates to see whether they fall in the current tax period.
05 International traders
Different VAT rules apply for those businesses who are trading outside the EU. These rules can be very complex and lead to much confusion.
If you have doubts, questions or issues, then please call us for free information.
06 Reclaiming VAT
If the goods or services you supply are exempt from VAT, you can usually reclaim the VAT you pay on purchases related to them. The proper forms must be filled out.
07 Incomplete VAT invoices
Issuing the proper VAT invoices to your customers is essential. You must keep VAT invoices for all your purchases.
We offer VAT training that can help your employees understand what needs to be done on a daily basis and how to comply with VAT rules.
08 How to avoid common VAT mistakes
VAT is very complex and many business owners struggle to understand their duty to comply with certain regulations.
Of course, VAT forms and returns should be accurate and filed on time to avoid penalties. In order to simplify your VAT filings and reduce the risk of inspection, there are certain steps you can take.
Below are various tips to help you:
Set up a VAT account: take a meticulous approach to staying on top of VAT.
Have specific employees familiar with VAT to set up your account and update accounting records each day.
Whether you plan to manage VAT yourself or delegate the work, make it clear who is responsible to avoid confusion and ensure consistency in your record keeping.
Choose the appropriate VAT scheme: check whether any of HMRC’s accounting schemes will make your life easier and suit your business better. There are several schemes that help simplify VAT if your turnover is less than £1.35 million.
Choose the right software: VAT accounting is easier to manage by choosing accounting software that automates VAT invoicing and files VAT returns online directly to HMRC.
If you are concerned that your business is not in full compliance with VAT, then contact us for help. We have worked with many companies all across the UK and offer free advice and help with VAT issues.
Speak to our team about your VAT concerns.
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